Post Plaza Shopping Center
Problem:
For years, the Post Plaza Shopping Center had presented a challenge for a regional bank as it struggled with overwhelmed ownership, incompetent management, high vacancy, and chronic deferred maintenance. The property's deteriorated physical condition, combined with the hostile existing ownership that threatened bankruptcy, had hindered the bank's previous attempts to divest from the asset.
Solution:
The lender faced a challenging situation and proposed selling us the debt to mitigate losses, but bankruptcy threats made it difficult. As an intermediary between the lender and the ownership group, we negotiated a mutually beneficial deal that facilitated a friendly short-sale and minimized acrimony. We were able to craft a unique transaction that allowed the ownership group to remain as a tenant in the building, paying a favorable rental rate, in exchange for relinquishing ownership. This arrangement provided essential interim income during the repositioning process, while the lender was able to maximize proceeds and avoid costly litigation.
Result:
Once the longstanding and problematic log-jam was resolved, the Property underwent a swift repositioning. Critical life safety issues and deferred maintenance were addressed, and targeted investments were made to improve the property's physical conditions. These efforts resulted in a significant increase in interest for the property, and occupancy rates rose rapidly from around 24% to approximately 70%, with rental rates 30-50% higher than projected. Ultimately, the Property was sold to a long-term investor for an unlevered multiple of 2.5x.